Gross Profit Margin

Gross Profit Margin is ultimately the most critical metric for a publisher to track. Although it may seem like the introduction of new digital technology would have detrimental effects on the publishing industry, instead it has given publishers a great opportunity to expand margins. eBooks, for example, don’t carry some of the costs of a printed book (paper, ink, binding, physical distribution, etc.).

  • 25.9%
  • 32.7%
  • 49.3%
  • 59%
97% Average Order Fill Rate Source: Finlistics
“72% of publishers plan to actively experiment with artificial intelligence (AI)”

Source: Reuters Institute

Distribution Cost as a % of Revenue

The publishing industry incurs high fixed costs, including compensation to authors, editing, design and marketing. As a result, it’s important to keep the distribution costs as low as possible to maintain acceptable margins. For traditional publishing methods, including hardcover and softcover publications, distribution costs include shipment to retail locations through internal distribution mechanisms or via a third-party distribution channels. The cost of digital distribution for publications like eBooks includes the cost of making titles available on various online marketplaces.

  • > 9%
  • 9%
  • 7%
  • 5%

Revenue Growth

To stay afloat in today’s competitive publishing landscape, revenue growth is dependent on adapting business models to incorporate the myriad of ways consumers access content today. Many publishers are still relying solely on traditional revenue streams, while others have embraced the change, introducing new sources of revenue like eBooks, podcasts, online subscriptions, etc. Revenue growth is a key metric that differentiates the publishers that are on the forefront of these changes from the publishers still dependent upon traditional revenue streams.

  • 0%
  • .14%
  • 4.3%
  • 8.5%
Foundational
Competitive
Best in class
Transformative

Revenue
Growth

0%

.14%

4.3%

8.5%

Revenue
Growth

This metric indicates the rate at which your company’s total revenue is growing.

Marketing Spend
(% of Revenue)

> 3.1%

3.1%

2.6%

2%

Marketing Spend
(% of Revenue)

A measure of the percentage of revenue that goes towards marketing expenses. Smart use of marketing dollars means efficiency and higher profit margins.

Gross Profit
Margin

25.9%

32.7%

49.3%

59%

Gross Profit
Margin

Percentage of revenue after cost of goods sold. This metric signifies how efficiently your company uses its resources to publish content profitably.

Days Sales
Outstanding

97 days

64 days

52 days

40 days

Days Sales
Outstanding

How many days, on average, it takes your customers to pay invoices. The lower this number is, the better. Also called DSO or Days Receivable, it is a financial ratio that illustrates how your receivables are being managed.

Spend Under
Contract

Decentralized buying

30-50%

50-80%

> 80%

Spend Under
Contract

The percentage of procurement spend managed by a contract. Purchasing goods and services using pre-negotiated contracts typically allows for better price negotiation. The higher this percentage, the more likely that your company is saving money on goods and services.

Distribution Costs
(% of Revenue)

> 9%

9%

7%

5%

Distribution Costs
(% of Revenue)

The cost of shipping goods from the manufacturer to the end sales location. This typically includes shipping cost as well as warehousing carrying costs to hold inventory until it is shipped to its final destination.

Customer Service
Responsiveness

> 1 day

> 7.7 hours

< 6 hours

Real-time

Customer Service
Responsiveness

This metric indicates the average time it takes to respond to customer issues. A lower response time drives more efficiency, freeing labor time for more valuable tasks or reducing the need to hire additional staff.

Finance FTE per
$50M Revenue

> 3.5 FTE

3.5 FTE

2.7 FTE

1.8 FTE

Finance FTE per
$50M Revenue

A calculation of how many FTE (Full Time Equivalent) Finance department resources are required for each $50M in revenue earned.

IT FTE Per
$50M Revenue

> 4 FTE

4 FTE

2.9 FTE

1.8 FTE

IT FTE Per
$50M Revenue

A calculation of how many FTE (Full Time Equivalent) IT department resources are required for each $50M in revenue earned.

Source(s): Finlistics

Parameters

Foundational

Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.

Competitive

Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.

Best in Class

Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.

Transformative

You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.